Should you refinance your home mortgage?
Learn about the mortgage refinance process, if you qualify to refinance your home loan, and whether or not refinancing might benefit you.
The recession may be over, but most Americans wouldn’t know it. Unemployment and foreclosures remain high while the general outlook on the economy is low. Many are looking to refinance their home loan as a way to free up some dollars and possibly stay in their homes. While refinancing your home mortgage is always better than foreclosure, you should take the time to determine if refinancing is right for you.
The mortgage refinance process
When you refinance your home mortgage, you are simply restructuring your debt—not eliminating it. Your new refinanced loan pays off your original home loan. You now begin to make payments towards your refinanced mortgage, which typically has some type of advantage over your previous loan—whether it be a lower interest rate, longer repayment period, or a switch from an adjustable rate mortgage to a fixed rate mortgage.
While these are all great reasons to move forward with a mortgage refinance, there are costs to consider. Expect to pay around 2 percent to 3 percent of the total loan amount in refinance-related costs, including appraisal and closing costs. You may be able to negotiate away some of these costs if you stick with your current lender, but it’s worth shopping around to determine where you can get the best deal. (If you do fill out multiple applications for refinancing, be sure to do so within a 30-day period; your credit score won’t be dinged if you submit your applications during this time period.) Costs can be paid upfront if you have the cash, through a higher interest rate on your loan, or by rolling the fees into the principal of your mortgage.
Find Out Who Qualifies and If: You Should Refinance Your Mortgage?
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